Policy update 2018

Insights from Georgina Penfold, The ICON

1. Proposed Changes to Electricity Network Charging

Network access charges (for either demand or generation) are currently on a first come first served basis, yet not all sites are
using all their capacity or they have more capacity than they have permission for. Transmission costs are expected to increase by 50% in
the next 5 years.

Ofgem is consulting on revising how distribution and network costs are calculated and passed through to consumers: the network is
constrained so we either need to invest or change how we use it. If the outcome will require a significant Code Review then this will be end of
2018/early 2019, with options developed through 2019.

The options Ofgem have put forward are:

i)Firmness: connection agreed and no-one can mess with
it. Might be wiling to reduce demand with notice (therefore becoming a flexible connection (for less money))

ii)Time profile: similar to the firm option, but flexible only
within fixed timescales (eg when your building is closed)

iv)Short-term access – only connected for a limited time (eg
temporary installation)

v)Shallow access: to do with generation

Forward looking charges – for example you pay to expand the site, even if lots of sites benefit thereafter (socialise the
cost). This could maybe on a capacity or consumption basis. It would also possibly mean the end of
TRIADs (which we’ve become too good at!)

CMP274 Time of Use Tariff is coming c. 2021-2023. It will allow for 2 peaks
(instead of the 3 winter peaks in TRIAD): one in the morning and one in the evening, Monday to Saturday (not Monday to Friday). This will hit for
example breakfast clubs, gyms, leisure centres, etc.

2. New (Voluntary) Emissions Reporting Scheme

CRC goes next year. The private sector will have a streamlined reporting process
through their financial returns to Companies House. For the public sector, BEIS has introduced a voluntary Emissions Reduction Pledge: it is likely
that this will become mandatory post-Brexit with transport and Scope 3 added in. Don’t let this monitoring slip – it’s important!

This is a European Directive to control CO2, SOX and particulates. It covers anything
that burns – eg diesel back-up, CHP – from 1-50MWth. It applies to new plant from 20.12.18, which must be registered with the Environment Agency, and
will apply to all existing plant above 5MW from 2024. The Directive requires you to monitor and report on emissions: urban targets are stricter than
in rural areas. Everyone will have to comply, unless the system is properly only used for back up (<50hours/year)

4. BREXIT

Very little will change with regard to gas and electricity trading and carbon capture, even if there’s no deal. The carbon floor price (as specified in the EU ETS) now flows into HMT: further details will be in the budget.

5Unidentified Gas

Until last year, Ofgem kind of guessed how much gas was lost in the system and we all contributed. The introduction of a new computer system highlighted that the old calculations had been way out. A new method is
being introduced (which will appear as a new line on gas bills) but the results are highly variable, and suppliers are having difficulty communicating about it. The suppliers, led by Total & Gaz Prom, are getting together to lobby Ofgem to stick with the old calculation method until the new method is
improved. A task group is being set up.

6. Also look out for…

Autumn budget (19th October)

Environment Act (‘autumn’) – with new enviro watch dog post-Brexit

Helm Review announcement (before 25th October) – could be pushed back a couple of weeks? (Check out the ICON
webinar)

Energy Management in London Boroughs

The London Boroughs Energy Group exists to share knowledge and support joint working on energy related issues between public sector bodies in and around
London.

We are a forum for Energy Managers from the London Boroughs and other public sector organisations in London and the surrounding counties. Membership of LBEG provides excellent opportunities to share knowledge and best practice, network with colleagues and associates and keep up to date with activity to promote energy
efficiency across London.